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Surprise medical billing creates undue financial hardships for patients and their families at a time when all they should be worried about is recovering. Congress must treat this issue with the seriousness it warrants and pass legislation that separates patients from the out-of-network billing disputes that lead to surprise medical bills.

In their quest to pass an appropriate solution, however, our federal legislators must ensure that they take a free-market approach to preserve the balance between insurers and providers. Unfortunately, some of the legislative proposals in Congress would do just the opposite, skewing the marketplace and creating even greater financial burdens for patients as well as providers.

A particularly harmful approach being suggested in certain legislation called “benchmarking” would allow the U.S. government to dictate rates to physicians. To determine these rates, the government would rely on insurance companies’ own data and in-network averages, which include significant discounts that are applied when insurers and doctors negotiate contracts.

Matthew Kandrach(Photo: Submitted)

This form of government rate-setting is especially dangerous because it would shift major financial losses onto local hospitals and emergency rooms. Many of these facilities are already struggling financially, most notably, the ones serving rural communities in Florida and across the country. For these facilities, benchmarking could spell financial ruin, leaving them with no choice but to scale back their services, lay off staff, consolidate, or close down entirely. Any of these outcomes would leave at-risk patients with fewer options and higher costs.

What’s more, a benchmarking-based approach to ending surprise medical billing would unfairly skew the marketplace in favor of large insurers over local physicians. It would give insurers greater power to demand increasingly lower rates for doctors and terminate longstanding contracts. This would result in provider networks shrinking even further, which would only make it harder for patients to find adequate in-network care.

Fortunately, some in Congress have also introduced legislation that includes a more market-based approach to solve the problem of surprise medical billing called Independent Dispute Resolution (IDR). Through the IDR process, insurance companies and health care providers would be empowered to negotiate out-of-network payments on a case-by-case basis.

Essentially, each party would be incentivized to submit their most reasonable payment amount through a transparent, online platform. Within 30 days, an unbiased, independent mediator would set a final payment rate based on these suggested amounts as well as a number of other factors based on third-party data. IDR ensures payments are based on the true market value of the services provided while preventing either side—or the government—from simply dictating prices for the other.

IDR has been in use in New York to protect consumers from getting hit with surprise medical bills since 2015. In that time, out-of-network billing rates have declined by 34 percent and in-network emergency costs have dropped 9 percent, helping New Yorkers save $400 million. IDR has provided such a balanced approach that both providers as well as the New York Health Plan Association support it.

With medical costs spiraling out of control, it is vitally important that Congress pass legislation to eliminate surprise medical billing for good. However, it is just as important that legislators take the time to pass the right bill. They should not pass legislation that would disrupt the balance between insurers and providers, nor should they simply rush this issue through by attaching it to an unrelated bill.

The only true solution to this problem is Independent Dispute Resolution. Senator Rick Scott should help protect Florida consumers and patients from high medical costs by supporting the market-based IDR approach and working to incorporate it into any legislation passed by Congress.

Matthew Kandrach is president of Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.